The story goes that Warren Buffett, not wanting to waste his time, would read a course's textbooks at the beginning of the semester, skip the classes, and pass the exams.

Whether the story's true or apocryphal doesn't matter. What matters is that a former colleague of mine, hearing the story, attempted the same strategy.

The results? Let's just say this guy was no Warren Buffett.

I share this anecdote because there's no end to the examples of self-defeating moves people justify in the name of Warren Buffett. In an effort to identify the moves that are worth following, here's what I believe are the five actions that explain exactly how Warren Buffett beats the market.

Action No. 1: Harnessing the power of a system
A well-conceived system is worth a thousand well-conceived tactics.

See the last two centuries of American capitalism as the most obvious example. You can insert your own list of gross political missteps, Wall Street greed, and corporate malfeasance that failed to stop the American economy's long-term progress.

Warren Buffett readily grasps the power of a good system.

You can see it in how he has structured his holding company, Berkshire Hathaway . Berkshire's structure allows Buffett to fund his company and stock purchases with the premiums from his insurance businesses. Since insurance companies get to hold their premiums until they have to pay out claims, Buffett gets to essentially borrow money for free and invest it in his market-beating ideas.

Which brings us to his system for finding his stock and company opportunities: It relies on learning about every publicly available company out there. He jokes about "starting with the A's," but the joke is reality. That was pretty much his method when he was getting up to speed decades ago reading those Moody's manuals, and it's his method today as he still reads annual report after annual report. For example, when he moved to co-purchase Heinz in 2013, he had already been following it for over 30 years, readying himself for an opportunity that may have never come. Even if the Heinz deal didn't happen, the studying would have contributed a better understanding of the deals that did.

As Berkshire Hathaway has gradually collected fully owned subsidiaries in just about every sector out there, Buffett's been able to supplement this knowledge of public companies with detailed, real-time operational data and access to expert managers from his own businesses. That combination can add context to just about any potential deal.

Speaking of the managers, his method for managing his 50-plus subsidiaries is a brilliant system. It's a system that has persuaded countless successful entrepreneurs not only to cede control of their babies to Buffett but also to stick around and run them. Buffett controls the macro-level purse strings (a.k.a. allocates capital) but allows the entrepreneurs and management teams to operate autonomously otherwise. You may argue correctly that they had that before -- though without the payout from a sale. What they didn't have is access to Berkshire Hathaway's money and its rock-solid credit rating (making borrowing cheaper). They also get the assurance that their companies will survive long after they're gone. If you don't think that's important to a founder, you haven't been paying attention to all the actions Buffett himself has taken to ensure Berkshire's health long after he's gone.

Buffett's "favorite holding period is forever" mantra plays well to assure sellers that he's in it for the long haul. It's also a reason he'll put up with mediocre returns from purchases that are past their primes (e.g., see his newspaper acquisitions).

This system of buying and holding indefinitely also has another huge advantage: tax efficiency. If you look at Berkshire's stock portfolio from its last annual report, you'll see it's sitting on over $60 billion in unrealized gains. The taxes on that would be enough to wipe out an entire year of Berkshire's profitability.

Every bit of these tax savings enhances Buffett's use of the greatest system we investors have: compounding returns.

Bottom line: Berkshire Hathaway's structure is a master course in systems thinking. And Buffett's systems were established early.

Action No. 2: Figuring out your system early and sticking to it
If you follow Buffett closely, you'll quickly notice how repetitive he is. In his interviews or at his annual meeting, you could often just substitute some recorded sound clips.

A "greedy when others are fearful" here, a "never lose money" there, and maybe a "naked when the tide goes out" for color.

This is a good thing.

The worst investors usually jump from system to system as conditions change; the best investors stick to a well-thought-out system throughout market cycles.

Buffett is clearly in the latter camp. You could see this discipline as he held onto an overpriced Coca-Cola but didn't buy hot tech stocks during the Internet bubble and when he held on to his banking stocks throughout the financial crisis. The advantages of sticking to the system outweighed the benefits of any tactical move.

Further, he figured it all out early. Do you still agree with your thinking 20 years ago? For the most part, Buffett does. Heck, some of his go-to quotes are more than a half century old!

One of the things he figured out early was to stick to high-quality companies. The next factor explains what he defines as "high-quality."

Action No. 3: Ignoring pie in the sky
When you boil it down, Buffett cares about two things in a company:

1. Has it proved that it can make efficient profits?

2. How confident can he be that it'll keep growing those profits efficiently (and significantly faster than inflation) in the long-term future?

Here's what that means from a practical standpoint. Buffett doesn't go after story stocks -- meaning that he doesn't trust a company's projections unless they're based on a track record. This practice helps ensure he doesn't have many losers weighing down his portfolio.

The most famous example is his avoidance of tech stocks. That's because there are few tech stocks that have a long-term track record of efficient profits. As for the ones that do have good track records, it's hard to project their future profits because disruption is so high in that space. We saw him make an exception with IBM, which has shown an ability to innovate over decades and has altered its business model so that it is more a service provider than a tech innovator.

What really confuses people, though, is that Buffett's seemingly simple system can't be predicted easily with screens of simple metrics such as the P/E ratio. Even now that the companies he can choose from are limited to the largest elephants, his purchases continue to come as a shock.

Many analysts ascribe precise figures around "margin of safety" (e.g., "Stock X is 40% undervalued!"), but Buffett's math is simultaneously less precise and more artful.

Here's the part that's missing from many analysts' equations. When analysts do a discounted cash flow calculation, they generally look out for five to 10 years and then assume a company can grow by somewhere near the rate of inflation.

Great companies beat inflation for a lot longer than 10 years. Understanding that nuance is a big deal. That's why Buffett could buy shares of Coca-Cola 100 years into its life and still make a killing.

How much of a killing? It's worth over 10 times what Buffett paid for it. He can say the same thing about his "boring" investments in Procter & Gamble and American Express. 

By avoiding pie-in-the-sky situations, he rarely goes hungry and frequently ends up with pie in a tall building. Not bad for a guy whom many growth investors pooh-pooh.

The next action also deals with heights.

Action No. 4: Hitching a ride on giants while ignoring the ants
Buffett has a great desire to be loved. As an awkward young man, he went so far as to conduct his own secret behavioral tests on people based on the principles of a Dale Carnegie course he took. Once he verified that the principles worked, he mastered them. You see it in how he refuses to "criticize, condemn, or complain," how he uses "praise and honest appreciation," and how he "talks in terms of the other person's interests."

Buffett took this weakness and made it a strength by relying on the advice of the giant in the space.

He has taken a similar "standing on the shoulders of giants" approach to investing. He's commented that his investing style is 85% Benjamin Graham (i.e., value investing) and 15% Philip Fisher (i.e., growth investing). You can also add in his business partner, Charlie Munger -- a brilliant investor in his own right who has no qualms about speaking his mind to anyone, Buffett included.

Those three are Buffett's largest investing influences, but Buffett seeks knowledge from great minds everywhere. As Munger has noted about Buffett: "Half of all the time that he spends is just sitting ... and reading, and a big chunk of the rest of the time is spent talking ... with highly gifted people."

As Buffett himself said, "By the age of 10, I'd read every book in the Omaha Public Library with the word 'finance' in the title -- some twice."

The end result is a giant standing on the shoulders of other giants.

While Buffett wants to win friends and influence people socially, he doesn't have that need for approval when it comes to his investing judgment. His work with the giants helps give him the unshakeable confidence that allows him to ignore criticism from the ants who are fearful when he is greedy.

Which gets us to the factor that Buffett says is his most important key to success.

Action No. 5: Focusing
According to his biographer, Alice Schroeder, Buffett has "focus like you have never seen on anybody else."

What this means is he's strategic in how he spends his time, he says "no" to a lot of things, and he doesn't have much of a work/life balance.

Remember that most of his time is spent improving his knowledge base via reading and talking to other wise people. That limits the amount of time he can spend managing his sprawling conglomerate empire, talking to the press, and socializing with friends and family.

We know the decentralized system he's set up helps him stay high-level in how he manages Berkshire Hathaway. He reads summary reports and talks to managers when they request it, but otherwise he mostly focuses on the big-picture strategy and capital allocation.

As for his public appearances, it seems that Buffett is always in the news. But he gets that exposure through a few high-impact public utterances a year: his annual meeting and shareholder letter, plus a CNBC appearance here and a New York Times article there. We Buffett followers then amplify the message.

Committing so much time and mental energy to honing his craft comes at the expense of family and non-work-related friends. The anecdote about his sneaking out of social engagements at his own house to read more annual reports is the one that sticks with me.

If 10,000 focused hours is the price of mastery, Buffett's well past the 100,000 hours for hyper-mastery.

Putting it all together
Beyond his highly above-average intelligence and his highly above-average emotional equanimity, we can put together exactly how Warren Buffett beats the market. He started obsessing on making money since before he was 10 and has kept it up into his 80s. He sped up his learning curve by figuring out who the trustable experts were and learning from them -- all the while surrounding himself with fellow high-caliber learners. He has made sure to make the most of his work by quickly establishing and sticking to well-thought-out systems. And finally, he focuses in a way that makes lasers jealous.

To put it into cliches, Buffett works remarkably hard and he works remarkably smart. It's not sexy, but it's true. Any explanation of Buffett's success that doesn't acknowledge those two things is either wrong or a misleading shortcut.

As my colleague should have realized, if Buffett was skipping classes, he was doing it to read more books.

Dividend investing is important in order to help you make the income you need from your portfolio. But there are different dividend strategies that people in different situations should consider.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at these two dividend strategies. With one strategy, which the Vanguard High Dividend Yield ETF and similar dividend ETFs use, the key consideration is picking stocks that have the highest dividend yield from the universe of stocks you're interested in owning. That strategy has the benefit of maximizing your income right now and is therefore useful for those who are living off their portfolio income currently. Yet the alternative involves investing for dividend growth, with Vanguard Dividend Appreciation ETF and other ETFs focusing not on current yield but on consistent track records of annual increases in dividend payments. This second strategy has the benefit of helping your income grow over time, making it suitable for those who don't need to maximize current income but want to provide for ongoing boosts in their dividend income in the future.

This is going to be a big year for Apple -- or at least an incredibly important one. Beyond its alleged plan to launch iPhones with larger displays, the company is also eyeing entirely new categories. Until last week, the primary focus has been Apple's plans to get into wearables with the rumored iWatch. But now two reports are asserting that Apple is also readying new hardware to work with its recently announced HomeKit.

Image source: Apple.

What is HomeKit?
As an Apple wireless software engineer explained in the HomeKit workshop during the 2014 Worldwide Developers Conference earlier this month, it is a new feature for iOS that is "bringing some rationality to home automation."

Image source: Apple.

How is this accomplished? HomeKit serves has a hub of collecting and sharing information between the apps that connect you to your smart home devices. This provides a far more consistent and seamless experience across home automation devices that are connected to the iPhone, Apple says. For example, after a user sets up one smart home device that connects to iOS, other smart home apps will recognize the device as well. Another example of HomeKits application: Users can group actions for different devices together and trigger them simultaneously with Siri.

Go big or go home
But with Apple typically only bringing to market products with high-volume potential, it poses a question: How could Apple stand out in a smart home market littered with many different unique applications from swarms of accessory makers?

Accessory makers are already providing a wide range of ways to make our homes smarter. Image retrieved from WWDC presentation for the HomeKit workshop.

Apparently, however, Apple sees opportunity for "mainstream" usage for hardware in the crowded category, according to 9to5Mac. The report follows an article from The Information earlier this week, which also said Apple is prepping hardware for the smart home.

9to5Mac says Apple is eyeing the smart home hardware for "continued growth."

The sources say that Apple is unlikely to move forward with devices to compete directly with Google's Nest as the Cupertino company feels it can build products that can gain usage wider than that of thermostats and smoke detectors. It is likely that Apple is building advanced speaker systems or control panels for homes, the sources say. It is possible that Apple's recent acquisition of Beats Electronics and the audio company's existing speaker systems play into this vision.

But can Apple-branded smart home hardware really move the needle for Apple? The tech giant's nearly $38 billion in earnings in the past 12 months is a monstrous number. Even Apple's iPod business accounts for just 1% of Apple's revenue and is now mostly ignored by analysts.

Considering 9to5Mac's examples of what Apple could be working on in the category, some sort of control panel sounds like the hardware with the most potential for mainstream adoption.

Whatever the hardware is, 9to5Mac says Apple is "beyond the exploratory phase of development."

Sometimes, even the most promising tech stocks need a little nudge to remind the market of what it's missing. And in the case of Universal Display Corporation , just such a nudge came from analysts at Goldman Sachs Friday.

To be sure, shares of Universal Display popped on Friday, after Goldman issued a new report both reiterating its buy rating on the stock and raising its 12-month per share price target by $2 to $44. For perspective, that represents a nearly 51% premium to Thursday's close.

To explain its optimism, Goldman echoed its long-held sentiment that Universal Display is the "most underappreciated product cycle play under [its] coverage," this time thanks to "new product and customer-driven catalysts lining up to drive stock outperformance in 2H14." The report also notes shares currently trade below 18 times trailing 12-month earnings, which means Universal Display is sitting near mouthwatering multi-year lows -- and this despite an earnings compound annual growth rate of 89% since 2011, and a 30% increase in average earnings per share estimates since March.

This is also something, by the way, that fellow Fool Anders Bylund astutely pointed out early last month. For the sake of illustration, here's an updated version of a chart Anders used illustrating as such:

OLED P/E Ratio (TTM) data by YCharts

After shares pulled back two weeks later in spite of Universal Display's exceptional first-quarter results, I even went so far as to call its still-depressed share price "a gift for the patient." After all, for long-term investors, I'm still convinced now it's a perfect opportunity to open or add to a position.

So what's coming down the pipe to drive Universal Display's results over the next year?

First, we've seen continuously growing commitments to OLED technology from Universal Display's largest customers in both Samsung Display and LG Display .

LG Display's 55-inch OLED panels offer umatched clarity and infinite contrast ratios, Credit: LG Display

On Thursday, for example, LG Display confirmed plans to invest nearly $790 million to ramp large-screen OLED production capacity at its OLED TV facility in Paju, South Korea, during the second half of this year. LG Display Chief Executive Officer Han Sang-beom elaborated the company is also working on deals to supply panels to Chinese tech manufacturers, whom he believes have emerged as "trend setters" in the global OLED industry. What's more, Han also insists "The OLED sector will become the mainstream of the global industry at a faster pace than cathode ray tube or liquid crystal display TVs."

Samsung's Galaxy phones & tablets use Universal Display's OLED technology, Credit: Samsung

In addition, multiple sources recently confirmed LG Display has struck a deal with none other than Apple to serve as the sole-supplier for flexible OLED displays for an upcoming iWatch device. Mass production for the iWatch is apparently slated to begin next month, and could serve as an important piece of validation for Universal Display's flagship technology.

Meanwhile, Samsung has had to put its OLED television ambitions on hold as it works out the kinks in its large-screen OLED manufacturing techniques. However, Samsung has since redirected funds initially pegged for that effort into a new facility to expand small- and mid-sized OLED production for Samsung Galaxy series devices.

As it stands, suffice to say there has arguably never been a more exciting time to be a Universal Display shareholder. Today's gains might seem noteworthy, but over the long-term I'm convinced the best is yet to come.

Automotive sales have been interesting to follow this year. Ford  has struggled to boost sales, while Fiat Chrysler Automobiles has surpassed the wildest projections. Meanwhile, General Motors' sales are up 3% year to date and 13% in May, compared to last year, despite its ongoing massive recall debacle. Though many people screamed that the sky was falling in January and February as sales took a big dip, the numbers have since rebounded strongly and look to drive even higher.

Let's look at why June sales might take a slight sequential dip, and also at why the sales performance will be stronger than it looks.

How it's going to shake out
There's little doubt that vehicle sales in June, when officially reported on July 1, will check in below May's phenomenal 16.8 million seasonally adjusted annual rate, or SAAR. However, another strong performance above 16 million would further prove that demand for new vehicles remains strong.

June information is forecast by Edmunds.com and J.D. Power.

Both J.D. Power and Edmunds.com predict total vehicle sales to check in at a SAAR of 16.3 million units for June. That would be a strong monthly performance and compares favorably to the June 2013 SAAR of 15.98 million. Still, sales in June are expected to decline roughly 3%, compared to last year. What gives?

The automotive industry reports sales on a sales month basis instead of a typical calendar month basis. In English, that simply means that the number of selling days can vary between comparable months. For instance, June 2014 has only 24 selling days while June 2013 had 26. May also had more selling days than June with 27, including a fifth weekend, which helped drive sales higher.

Basically, this June's results are facing tough sequential and year-over-year comparisons. While overall sales volume is expected to decline in June, compared to the previous year,, when you adjust for the difference in selling days June's sales are actually expected to check in 5%-6% higher than last year's result.

But all of the sales figures discussed so far are wholesale numbers, which aren't as representative of true vehicle demand as retail sales. After all, these projections are misleading if the cars end up sitting on dealership lots collecting dust. 

It's all about the retail
A consistent decline in retail sales would be a red flag for automotive investors. Fortunately, that doesn't look to be the case in June. For example, J.D. Power expects retail sales of light vehicles to check in at 1.1 million units for the month; when adjusting sales for the difference in selling days, that would hash out to an increase of 6% over last year's June.

"When combined, May and June retail sales are expected to be up 7.2 percent, compared with May and June 2013, which underscores the continued positive trajectory in growth and overall health of the industry," said John Humphrey, senior vice president of the global automotive practice at J.D. Power, in a press release.

With the explanation of June's projected sales decline out of the way, let's look at how the individual automakers are expected to stack up.

Winners and losers
Here's is Edmunds.com's sales forecast for the top five automakers, by wholesale unit volume, for June.

Source: Edmunds.com

If those June projections pan out when automakers report official results Tuesday, General Motors would be the biggest year-over-year loser in terms of market share, with a decline of 110 basis points, to 17.8%. On the flip side, Fiat Chrysler Automobiles looks to be up 110 basis points, to 12.3%. Ford would check in with 16.2% of the market, a 60-basis-point decline compared to last June. Toyota rounds out the top three, in terms of market share, with a 60-basis-point increase to 14.6%.

Ultimately, investors should keep selling days in mind when looking at the overall industry sales volume. It would be wise to focus more attention on SAAR levels or sales adjusted for selling days. Sales momentum is still strong and, according to J.D. Power, there is a 55% increase in new-model activity in 2014 compared to 2013. A plethora of new designs and models should continue to power sales higher in the near future. Just remember one thing on Tuesday: June's sales will indeed be better than they appear.

Shareholders who seek to evaluate fashionable yoga-wear manufacturer and retailer Lululemon Athetica  have numerous factors to consider. Not only did the company recently hire a new CEO, Laurent Potdevin, but it announced a $450 million share buyback program and updated investors on its growth plans for the current fiscal year.

While these announcements sent the company's shares to their lowest level in years, they aren't the only drivers of the company's overall business. Shareholders have numerous other factors to consider, including return on equity, sales growth, and perhaps one of the most important for retailers -- gross profit.

The scoop on the gross profit margin
Gross profit for a retailer, or any other business, is simply what remains after subtracting the cost of goods sold from net revenue. The measure ignores things like selling, general, and administrative expenses, depreciation, interest expenses, or any one of numerous other costs a company might incur in its day-to-day operations.

Looking at a company's gross profit margin and which way it is headed can be very telling. It lets Foolish investors know what type of business they are dealing with (a discounter or a premium brand), and also lets them know what to watch out for. After all, any profitable business with a huge gross margin is bound to have imitators.

Stacking up to the competition
There have been a lot of changes at Lululemon recently. All of them are important in evaluating Lululemon's business. Lululemon's gross margin is essential in assessing how much the company secures from every dollar of sales after it accounts for the cost of that good. So how does Lululemon stack up to a few other big retailers?

Clearly, shareholders in Lululemon Atheltica are dealing with a premium retailer. Its gross margin is astronomical, not only on its own, but also in comparison with those of competitors The Gap and Ross Stores . The Gap has been included in this company comparison because its subsidiary Atheta directly competes with Lululemon, and its creation occurred because executives over at The Gap saw the profit relished by Lululemon.

Ross Stores serves as a solid contrast with Lululemon. Ross Stores seeks to buy fashionable merchandise at a discount and sells this merchandise to customers at a discount as well. Lululemon, with its $82 Luon pants, represents the other end of the retail spectrum from Ross Stores.

What is potentially troubling about the gross profit margins of these three very different companies is the trend at Lululemon. Both The Gap and Ross Stores are holding steady on their gross profit margins, while Lululemon's gross margin seems to be slowly trending downward. This could be a major cause for concern, depending on the reason for the decrease. So should shareholders worry that Lululemon's most profitable days are behind it?

Thankfully, the answer appears to be 'no.' Within the company's latest annual filing, Lululemon gave two reasons for the decrease: (1) a decrease in product margin of 200 basis points due to a lower sales mix of higher-margin core items related to the pull-back of black Luon pants, and (2) a non-recurring charge of 110 basis points related to the pull-back of black Luon pants in the first quarter of fiscal 2013.

Clearly, the company's gross margin decrease in fiscal 2013 resulted primarily from Lululemon's well publicized "Luon pants debacle" and not because it had to discount ALL of its products in order to bring in customers. While there are no guarantees, it seems likely that Lululemon's profit margin will likely hold up for the foreseeable future.

Foolish takeaway
Lululemon is definitely a unique brand with a very healthy profit margin. This large profit margin has led to imitators that seek to cut in on the company's business, such as The Gap's Athleta brand, but this has not forced Lululemon to discount its product in order to generate sales. Lululemon Athletica may have numerous problems to contend with, but its gross profit margin is not one of them. Foolish investors would be wise to keep this information in mind when deciding whether or not Lululemon would benefit their portfolios.

The Dow Jones Industrials lost just under a hundred points this week, dropping from the record levels where it started the week as investors worried about the possibility that the coming second-quarter earnings season won't go as well as companies hope. Despite relatively benign news during the week, DuPont , Boeing , and ExxonMobil posted the worst losses among Dow stocks over the past five trading sessions.

Source: DuPont.

DuPont dropped more than 4%, with nearly all of the losses coming on Friday after the chemical and agricultural-productivity company issued a dire earnings warning. Blaming an unexpected drop in demand for corn as farmers gravitated toward planting more soybeans, DuPont said that its earnings per share for the full year would come in $0.20 to $0.35 lower than anticipated, with a new range of $4 to $4.10 per share falling well short of where most shareholders expected to see the chemical company's results. Given the extent of the decline, investors are clearly worried that this is more than a one-time event, yet if DuPont can avoid duplicating the mistake next year, then the damage could be far less in the long run than today's share-price plunge would suggest.

Source: Boeing.

Boeing fell almost 3%, with declines coming steadily throughout the first part of the week. Most of the discussion about Boeing this week came in connection with the coming debate on reauthorization of the U.S. Export-Import Bank, which provides funding to foreign nations seeking to make major purchases of high-ticket items like aircraft. Boeing has historically benefited a great deal from the existence of the Export-Import Bank, and if the entity doesn't get reauthorization from Congress, then it could potentially cost the aircraft manufacturer more than $10 billion in sales, assuming would-be buyers can't find financing elsewhere. Commercial customers have largely been able to support Boeing's stellar growth recently, but nevertheless, losing the Export-Import Bank would be a sizable blow to Boeing's future prospects.

ExxonMobil declined 2.5% on an eventful week in the energy industry. News that the U.S. government had opened up export of crude oil turned out to be somewhat overstated, with the specific authorization allowing just two companies to send a limited amount of processed energy products overseas. Nevertheless, refinery stocks plunged across the board, and given the importance of Exxon's downstream operations as part of its overall business, the Dow energy stock felt the negative impact as well. At this point, the week's refining-led declines seem overblown, but it remains to be seen how the U.S. will react in the future to further attempts to open up crude-oil trade to international buyers.

Microsoft's Surface Pro 3 is a dramatic improvement over its prior Surface Pro models -- unfortunately, that's still not good enough. Although critics generally agree that Microsoft continues to make great strides in improving the laptop/tablet hybrid form-factor, most believe that the Surface Pro 3 still comes up short.

To make matters worse, Microsoft's decision to market the device as a direct alternative to Apple's Macbook Air seems to have only exacerbated the problem.

Microsoft continues to iterate on its vision
Microsoft's Surface Pro 3 embodies, better than any other device, Microsoft's vision for personal computing. With a 12-inch touch-screen and optional keyboard that doubles as a protective cover, Microsoft's Surface Pro 3 may be the first device that can truly claim to double as both a laptop and a tablet, and make use of the hybrid nature of Windows 8.

The Surface Pro and Surface Pro 2 also tried to accomplish this feat, but were hamstrung by a number of limitations. Although they were capable of running just about any piece of software written for Microsoft's Windows operating system, they weren't ideal tablets -- too thick and too heavy, with bad battery life and few mobile apps. They didn't make for the best laptops, either, as their 10.6-inch wide screens were too small for productive work, and their kickstands required the use of a solid surface like a table or desk.

Microsoft's latest Surface Pro fixes many of these problems, with a larger display, thinner and lighter design, and better kickstand. Reviewers have almost unanimously praised these improvements.

"Writing on the Surface Pro 3 [is] easy," wrote the LA Times' Salvador Rodriguez. "[It] was more comfortable to use on my lap than any laptop I've tried."

PCWorld's Mark Hachman is a fan of the new form factor, claiming that the "slimmed-down Surface Pro 3 feels like a proper modern-day tablet."

Too many trade-offs
But in spite of the improvements, many reviewers remain wary of recommending the device, particularly when compared to Apple's Macbook Air. Microsoft itself is responsible for the comparison, going so far as to offer owners of Apple's laptop credit toward a Surface Pro 3 when they trade in their device.

"Microsoft Surface Pro 3 Doesn't Stand Up to MacBook Air" declared Re/code's Katherine Boehret. Although Boehret agreed that the device could, in theory, replace both a laptop and a tablet, she found it to be lacking on both fronts. As a tablet, Boehret found fault with the over-sized screen, and as a laptop, she took issue with its awkward top-heavy build and "flimsy keyboard."

AnandTech's Anand Lai Shimpi was more favorable in his review, but ultimately came to a similar conclusion, stating that he would "rather carry a good notebook and a lightweight tablet."

The New York Times' Farhad Manjoo called the Surface Pro 3's flaws "damning" and characterized the device as nearly worthless for intensive work. Rather than compare it to Apple's Macbook Air, Manjoo thought it more similar to Apple's iPad -- a much cheaper, far more portable device.

Microsoft's hardware ambitions
In so far as consumers use reviews to make gadget purchasing decisions, it doesn't appear that Microsoft's latest Surface Pro will be a runaway success. Holding the device up against what's arguably the best Ultrabook on the market, Apple's Macbook Air, hasn't resulted in many favorable comparisons.

Cirrus Logic seems in many ways the anti-InvenSense . While it seems that the sell-side perpetually raises expectations for the latter, claiming that this time InvenSense will win meaningful content share inside of next generation Apple products, longtime Apple supplier Cirrus Logic -- which has a fair amount of content across Apple's devices -- seems to be the subject of analyst reports claiming that it has lost content over at Apple.

What's the latest on Apple and Cirrus?
As a brief reminder, Cirrus Logic is well known for providing audio CODECs as well as audio amplifiers to Apple for its iPhone and iPad products. That said, things have started to seem a bit wobbly as Cirrus lost an audio amplifier socket inside of last year's iPad Air.

To compound matters, a research note from Rosenblatt Securities claims that Cirrus may have lost 50% to 100% of the power amplifier content within Apple's upcoming iPhone 6. The firm believes that this content is worth about $0.80 per unit, which is material over what could be well north of 100 million iPhone 6 models sold over the next year. (Cirrus' revenue this year looks to be about $700 million per consensus, so this would not be a trivial loss.)

Is this true? If so, should you panic?
Keep in mind that though these analysts are generally better connected than us mere mortals, their information isn't necessarily 100% accurate. For instance, last year, many of the major investment firms upgraded InvenSense on the prospects of material design wins within the iPhone 5s and/or iPhone 5c. This never materialized, much to the chagrin of InvenSense bulls.

Now, that's not to say that it isn't the case that Cirrus has lost this content -- it very well may have. However, the good news is that many investors have probably already factored in this share loss over at Apple, at least to some degree. That means that if the tear-downs show content loss, the stock is likely to lose value, but it won't be as severe as it would be if it were a complete surprise.

On the flip side, as noted in my prior piece -- if Cirrus ends up actually not have lost that content, then the "discount" that the market is probably applying to the share price in anticipation of this content loss is removed and the shares should rally.

Foolish bottom line
Cirrus Logic and InvenSense really do seem to be polar opposites. The former is beaten down on the expectations of iPhone content loss while InvenSense is rising on the prospects of content share gains over at Apple. It won't be long now before Apple's next-generation iPhone hits the shelves, so we'll know exactly Cirrus' and InvenSense's respective involvements with the iPhone 6 soon enough.

Source: Wikispaces.

The old mantra "Think globally, act locally" apparently applies to Amazon.com , which is gearing up to roll out a food takeout service. The e-commerce behemoth plans to capitalize and expand on its growing network of local services, and starting with a base in Seattle, Amazon plans to eventually go global with it.

Think of it as a mashup of its AmazonFresh grocery delivery service that it started some five years ago with the news from Reuters earlier this month that it wants to compete against local marketplace platforms like Yelp and Angie's List to pair up consumers with everything from babysitters to contractors. There hasn't been anything publicly revealed by Amazon itself, other than a brief appearance of the service on the Amazon Local iPhone app before it was reportedly pulled because of a bug, but Tech Crunch reports it's going to be part of Amazon Local and possible acquisition targets are already being eyed.

Similar to Groupon, Amazon Local offers consumers daily deals, coupons, and discounts from merchants in a customer's neighborhood. And though the Internet retailer's plans for a futuristic drone delivery service have been temporarily grounded by the FAA, it seems this is a coordinated plan a long time in the making. Yet I imagine drone deliveries will be happening sooner rather than later, as Russian pizzeria DoDo Pizza made the first commercial pizza delivery via drone last Saturday.  We're likely to see more such services popping up around the world.

Despite the global potential of Amazon's foray into takeout, it's expected to take a go-slow approach unless the service is an overwhelmingly big hit. Still, it's easy to see how all this will integrate into a seamless endeavor to make itself indispensable to both local businesses and consumers. 

Unlike a few years ago when local services business like LivingSocial, Local.com, and ReachLocal were suddenly hot and viewed as threats to Groupon, the lack of a competitive moat made their proliferation superfluous. It's no surprise they crashed and burned, and today their stocks, including Groupon's, are shells of their former bloated selves. But Amazon doesn't have that problem.

It's broadly entering the local services market, not only hooking up merchants with potential customers, but giving them a means to make payments too. Last year it acquired mobile payments start-up Gopago, which meshes well with its "Login and Pay with Amazon" service. It provides the retailer with a means of opening up other verticals, and with its focus on food, a restaurant reservation service that competes with OpenTable -- which was just bought by Priceline for the sum of $2.6 billion -- is one potential service that would seem to be a natural outgrowth of this focus on local.

Even so, Amazon is right to not rush this service out too fast. As it found with grocery delivery, it's not so simple or easy as shipping a big-screen TV, especially when it comes to produce, because spoilage has to be accounted for. The delivery service was launched with the reported intention of serving as many as 40 markets, but today it still only serves three: Northern California, Southern California, and Seattle. With food takeout, individual local preferences have to be taken into consideration, which may prove cumbersome for a company with a virtual global footprint.

The development shows Amazon is still an innovative force, and brings to mind a lot of possibilities of how many other pies it can stick its fingers into, but don't look for this to become a meaningful part of its business model anytime soon -- and for most of the country, don't expect to log on to Amazon's website to order up some Chinese takeout, either.

Shares of seemingly struggling bookseller Barnes & Noble have been on fire so far in 2014, surging well over 50% year to date and leaving broad market indices such as the S&P 500 in its dust.

BKS data by YCharts

Fueling that run all the more, Barnes & Noble stock surged once again recently in the wake of Barnes & Nobles report for its fiscal year 2014 annual performance. More to the point, Barnes & Noble announced during the earnings report that it would be divesting its long-struggling Nook e-reader and tablet division, leaving investors struggling to grasp what this move means for Barnes & Noble's digital future as well as the competitive landscape for other hallmark tablets like Apple's iPad.

A win or loss for Barnes & Noble?
Some Barnes & Noble shareholders have argued for some time now that this move will unlock significant shareholder value since it will both enable the Nook management team to focus on competing against the likes of Apple's iPad, while also helping the market recognize the true value of Barnes & Noble's surprisingly robust brick and mortar retail business.

From an investors' perspective, this is absolutely the right move. The Nook lost its toe-hold in the tablet market some time ago as powerhouse tablets like Apple's iPad and others control the bulk of shipments in developed markets like the United States. The company may not be saying it, but this move opens up the door for Barnes & Noble to let the Nook potentially die a quieter death at the hands of Apple's iPad. In the video below, tech and telecom specialist Andrew Tonner looks at Barnes & Nobles recent move in greater detail.

Over the past few years, the video advertising industry has significantly moved from television to online sites. One of the main beneficiaries behind this scenario is Google  , which generates considerable revenue from its video-sharing website, YouTube.

Last year, this subsidiary was estimated to make $5.6 billion in revenue, providing entertainment to more than a billion users per month. Amid the growing trend of companies shifting their budgets from TV ads to digital media, other companies, like social network giant, Facebook , are entering the business of providing video ads.

YouTube is one of Google's most important ad platforms, and it has a positive reputation as an efficient tool to build business brands. Throughout this year, Google has acquired several video ad tech companies, and has also launched new services. These decisions suggest an interesting outlook for growth in the next months and years.

Improving video ad technology through acquisitions
Google's acquisitions of video ad tech companies this year reveal its aim to improve its platform service and ad measurement. Last week, the tech giant bought mDialog, the developer of SmartStream, a platform that manages, delivers, and measures video advertising performance over a variety of IP-connected devices.

This recently acquired company will work with Double Click, Google's ad technology unit, to improve the service given to publishers and agencies. As a result, clients could monetize their videos better. In May, Google acquired Adometry, another video ad tech provider, which operates algorithms able to determine the channels in which ads eventually turn to conversion or sales. In that manner, the organization can offer better ad measurement data to its clients, so that they know exactly how their ads monetize.

Launching new initiatives
Due to marketers having issues with their ads appearing next to poor-quality content, Google launched "Google Preferred". This initiative allows clients to present their ads in the top 5% of the most popular content in YouTube, or in high-quality channels. As a result, they can build their brands better, appealing viewers that are likelier to buy their products or services.

Earlier this month, Google started offering a programmatic ad video service only for top brands and premium publishers through its newly created marketplace, called Google Partner Select. The value of this service also seems to justify a premium price, destined for select brands. It seems like an intelligent move to increase revenue from clients with a high willingness to pay. This could considerably increase Google's overall ad revenue, plus helping other businesses expand their brands to a great extent beyond the YouTube ad platform.

Enhancing the YouTube ecosystem
Later in this summer, YouTube will launch its paid music service. Even though it is ad-free, this initiative can engage users into the site's ecosystem, which could then lead to users watching videos and clicking on ads. So far, 95% of record labels in the music industry will be featured in the service. In that way, it seems like an interesting way to improve the entertainment service of YouTube, adding value to the video-sharing site. Moreover, it is a new way to create a revenue stream from the large amount of the video giant's users, since the service will require a paid subscription.

Competing with world's largest social network
Facebook started offering a premium video ad service for select advertisers a few months ago. It works with a company called AceMetrix to assess high-quality standards of video ads in terms of watchability, meaningfulness, and emotional resonance. Recently, Facebook tweaked its news feed algorithm in order to determine better whether users watch video ads.

This new branding tool could increase Facebook's revenue considerably, taking into account that it can reach approximately 1.3 billion monthly users. It could also divert marketer's attention away from YouTube, depending on the brand's aims. For that reason, the video giant should be aware of Facebook's future moves in the video ad industry.

Final foolish takeaway
Google plans to fully take advantage of companies transitioning their ads from TV to online sites. For that reason, it has acquired video ad tech providers and has launched new services. The acquisitions show how Google seeks to improve its video ad platform while making it a better tool to help its clients build their brands. Moreover, through the launch of new initiatives, the organization can create better targeted ads able to compel agencies and publishers to the video-sharing website.

The future launch of its subscription-based music service shows how Google is improving YouTube's ecosystem and creating a new revenue stream. Also, it currently leads in the video ad industry, staying ahead of Facebook. However, it should still be aware of how the potential growth of the largest social network's video ad service could be a threat in the future.

The first quarter was a tough one for steelmakers, as harsh winter weather raised costs and delayed shipments. AK Steel's CEO James Wainscott even said, "thank goodness it's behind us" during the first quarter earnings call. Steel Dynamics blamed weather conditions for reduced earnings, as cost rose due to higher electricity and natural gas costs. Nucor and U.S. Steel were hit by the weather as well.

It turns out that steelmakers' problems did not end in the first quarter. AK Steel recently issued its second quarter guidance, stating that it expected to report a net loss of $0.19 to $0.23 per share. This number is a disappointment, as analysts were hoping that the company would be able to score a profitable quarter.

Nucor's guidance was also soft. The company stated that its second quarter earnings would be in the range of $0.35 to $0.40 per share, at the low end of its own guidance and below analysts' consensus estimates. However, it doesn't look like the issued guidance changes the outlook for AK Steel and Nucor.

AK Steel's adjusted loss will be much lower
Importantly, most of AK Steel's projected loss consists of a $0.17 per share loss due to mark-to-market losses on derivatives. This hedging loss is unrealized, and the company could record a gain on its hedge position going forward, which will offset this loss. Without this loss, AK Steel's second-quarter loss will be $0.02 to $0.06 per share. Both numbers are way better than they were in the first quarter, when AK Steel reported a loss of $0.63 per share and an adjusted loss of $0.40 per share.

Meanwhile, shipments rose 9% from the first quarter numbers, reflecting the improvement in weather conditions. AK Steel also stated that pricing remained flat. At first glance, this might seem like negative news for other steelmakers like U.S. Steel or Steel Dynamics, as steel prices are at depressed levels. However, as the steel market continues to be oversupplied and is pressured by cheap imports, the fact that the price did not deteriorate further is a positive.

Nucor: fairly valued?
Nucor's second quarter earnings will likely be in-line or slightly above first quarter earnings, which is rather a disappointment. However, the fact that Nucor will have a hard time showing growth in current conditions is not a big surprise.

The company's relatively low leverage, strong balance sheet, an almost 3% yield and a history of profits support its shares. However, all these advantages are already reflected in Nucor's shares, which trade at a premium to peers. In order to have more upside, Nucor must deliver strong earnings growth, which is difficult to accomplish in the current price environment.

Bottom line
Steelmakers' earnings warnings don't change the big picture. As shipment problems transferred into the second quarter, the second half of the year will be busier for the industry. Yet, the companies must be able to catch up with shipments by year-end.

At current prices, AK Steel remains cheaply valued as it trades at a discount to peers while showing decent performance in today's tough market. Nucor, on the other hand, looks fairly valued and lacks upside catalysts.

Free-range chickens are for the birds. In the 21st century, the real money is in free-range computer viruses.

Source: Wikimedia Commons.

Late last month, DARPA -- the Defense Advanced Research Projects Agency -- announced an intriguing award given to the nation's biggest defense contractor, Lockheed Martin . For $14.2 million, Lockheed Martin will construct and operate the U.S. Army's National Cyber Range, a virtual world where viruses of all shapes and sizes can roam free.

Designed as a "secure, self-contained facility where complex defense and commercial networks can be rapidly emulated for cost-effective and timely validation of cyber technologies," NCR was begun with the help of a $5.4 million grant awarded to Lockheed Martin back in 2009.

In that first phase of the project, Lockheed drew up the concepts for the Cyber Range's design and operation, along with detailed engineering and system demonstration plans. Now, in the second phase, the defense contractor will build and evaluate prototype ranges in which the military can "assess and validate leap-ahead cyber research technologies and systems."

The goal: To develop "highly effective cyber weapons and defenses" for the nation's military.

Why would we want that?
Last month, the U.S. Department of Justice filed a 56-page indictment against five Chinese military officers. Working for Beijing's obscurely named "Unit 61398," alleged the DOJ, these hackers had broken into the computer systems of five U.S. companies -- Westinghouse, SolarWorld, Alcoa, Allegheny Technologies, and U.S. Steel -- and stolen large amounts of commercial secrets with the aim of passing the data on to Chinese competitors.

Bad as this sounds, it's only the tip of the iceberg. Internet security company FireEye says it has detected thousands of similar incidents. Chinese military officers are hacking into everything from U.S. commercial companies, to defense contractors, to the Pentagon itself. (On the other side of the coin, there's more than a little evidence that the U.S. security services have engaged in computerized warfare escapades of their own).

So, you can easily see why this is an area that the Defense Advanced Research Projects Agency might be interested in exploring further.

Time for some payback
Lockheed also has a dog in this fight. In 2009 -- around about the time it got tapped to begin drawing up plans to build the NCR for DARPA -- Lockheed was hit with a hack attack from beyond U.S. borders. Then as now, the culprits were believed to be agents of the Chinese military, who made off with "several terabytes" of data regarding the company's new F-35 stealth fighter jet. The company had sunk billions of dollars into developing the jet -- and in the blink of an eye, some hacker took it all away for free.

Two years later -- surprise, surprise -- China debuted its own stealth fighter jet, the J-20.

China's J-20 "Mighty Dragon" stealth fighter. Photo: Wikimedia Commons.

What it means to investors
So, Lockheed has a personal stake in improving cyber security. It also has the tools to succeed with the new DARPA project. According to Forbes, Lockheed Martin isn't just the nation's biggest defense contractor, it's also the top federal provider of information technology and services, and has been so "for nearly 20 years."

S&P Capital IQ data show that the company's mission systems and training division, home to the simulation, training, and support unit that runs NCR, booked $8.1 billion in revenues last year. That made it Lockheed Martin's third-biggest revenue generator. And with an 11.1% operating profit margin, MST is also the company's third most profitable division.

Granted, the $19 million and change that DARPA has contracted to pay Lockheed Martin for its work on NCR won't "move the needle" on this business much. But it will give the company an opportunity to get better at cyber security, building that business, and further securing revenues and profits at Lockheed's even bigger, more profitable aeronautics division (which builds the F-35). And the government will be paying Lockheed to develop the expertise.

Only $19 million? Sure. But that's better than a sharp stick in the eye.

On June 25-26, Google revealed a slew of new products at its annual I/O conference. From an update to its mobile operating system, called Android L, to the brand-new platforms Google Fit, Android TV, and Android Auto, I/O was filled with exciting news that continued the game of technological one-upmanship with Apple .

In the following This Week in Tech video, The Motley Fool's general manager, Eric Bleeker, and tech bureau chief Max Macaluso break down all the news from the Google I/O conference and discuss how announcements such as Google Play revenues compare with Apple's App Store. 

After announcing it in March, Google finally unveiled Android Wear at its developers conference on Wednesday. Like Android, Android Wear is a platform rather than a unified product, but will be available to consumers through two devices -- the G Watch and Gear Live -- early next month.

Unfortunately, neither of these watches include much in the way of biometric technology -- widely rumored to be the defining feature of Apple's highly anticipated iWatch.

An extension of your smartphone
As it stands, Google's Android Wear functions to merely extend a user's Android smartphone. Android apps can be customized for the watch, making them easier and more convenient to use, and notifications are displayed on the watch's face, allowing owners of Android handsets to keep their phone in their pockets.

But Android Wear doesn't offer anything in the way of a compelling new experience. Not having to actually pull a smartphone out of a pocket to browse notifications may be convenient, but it's not necessary -- that is to say, an Android Wear device doesn't offer much beyond what's already available on a typical Android handset.

Besides running a modified version of Google's mobile operating system, LG's G Watch and Samsung's Gear Live don't differ significantly from Samsung's already existing line of Gear smartwatches. Samsung's watches, running its own Tizen operating system, are restricted to Samsung's Galaxy phones -- Android Wear devices will work with nearly any modern Android handset.

But given that Samsung sells more smartphones than any other company (beating Apple by a wide margin) its relative success in smartwatches may serve as a good proxy for the expected success of devices running Google's Android Wear.

According to Strategy Analytics, Samsung shipped just 500,000 Galaxy Gears in the first quarter of 2014. As a new product category, that could be considered impressive, but as a percentage of Samsung's total smartphone sales (roughly 85 million, according to IDC) it's inconsequential.

Apple could use health as a key selling point
According to The Wall Street Journal (subscription required) Apple has much higher expectations for its forthcoming smartwatch. No one knows for certain that Apple is even planning to release such a device, but the Journal's sources claim that Apple intends to ship 10 million -15 million smartwatches this year.

That would make it's iWatch business about one-tenth the size of its iPhone business. In that case, Apple's iPhone would still account for the vast majority of the company's revenue and profit, but the iWatch could have a meaningful impact on Apple's business in its very first year.

Apple's confidence in its smartwatch may be driven by its focus on differentiation. For months, Apple's iWatch has been rumored to be a product primarily focused on health -- those rumors were given credence by the announcement of HealthKit, a new app set to be included in iOS 8, the forthcoming update to Apple's mobile operating system. HealthKit serves as a biometric dashboard, allowing a user to easily access the data their connected devices are collecting.

The Journal claims that Apple's iWatch will include as many as 10 sensors, most of which will be centered around monitoring the wearer's biometrics and fitness level. To be fair, Samsung's Gear Live includes a heart rate monitor, but that's fairly basic -- even its Galaxy S5 smartphone has a heart rate sensor.

Android Wear is lacking
Google is making it possible for its Android partners to create more health-focused products down the line -- Google Fit, an equivalent, alternative service to Apple's HealthKit, is coming to Android later this year.

But until its hardware partners take advantage of Google Fit, Android Wear might see surprisingly little adoption, on par with the tepid reception Samsung's Gears have so far received. If Apple's first-generation iWatch can do more than simply extend the wearer's iPhone, it could easily outsell the Android-powered competition.

3-D printing, and other additive manufacturing technologies, has built up a lot of buzz in the past few years. But the industry and the process itself may be older than you realize. As Proto Labs  CFO Jack Judd explained recently: "Most of the technology that is out there right now in the additive industry has been out there for 20 years. Currently the PR around the industry might make it look like an awful lot of what they do is brand new, but it's not."

Although 3-D printing companies garner the lion's share of attention today, Proto Labs is quietly becoming the dominant player in its own corner of the market. It offers more traditional injection-molded and machine-manufactured designs, serving customers who need a few parts quickly, not mass production. After seeing this success so far, I'm convinced the stock is ready to manufacture serious market-beating returns for investors.

1. Growing market opportunity
The "genius" of Proto Labs, as David Gardner put it when he first recommended the company in 2012, is that it reinvented a process, harnessing "the power of industrial manufacturing for clients whose modest needs would ordinarily get them laughed off the factory floor." For customers who only need a few -- or just one -- prototype made, 3-D printers simply aren't cost-effective. Proto Labs is there to fill the gap, with more material and more flexibility for these smaller customers.

Data from IBISWorld and Proto Labs

2. Better, faster, cheaper service

Time is of the essence in the prototype market, now more than ever before. Developers face a choice of either taking a project on themselves, possibly getting it wrong and having to go back to the drawing board with lost money and, maybe more importantly, lost time. Or they can go with Proto Labs -- which is dead set on making sure they get it right and get it fast.

Proto Labs' proprietary technology has helped the company streamline the entire customer experience, from ordering to production to shipping. The skilled labor conventionally required to quote and manufacture parts in low volumes puts competitors at an immediate disadvantage, which Proto Labs continues to exploit. Proto Labs customers conduct nearly all of their business with the company online.

With its low cost and quick turnaround time in a variety of materials and services, Proto Labs is garnering a stellar reputation as the first mover in its niche. That helps it win more business and will help it continue to gain share in this growing market.

Product developers face plenty of challenges, including slow turnaround time, difficulty sourcing low-volume parts, customer-unfriendly technology infrastructure, and high costs, Proto Labs sees these difficulties as pure opportunity. One great way is Proto Labs' Cool Ideas Award. It's the company's effort at accelerating innovation, helping entrepreneurs turn ideas into reality quickly and efficiently.

• The problem: Too many promising napkin sketches end up in the trash because product development resources and funding are scarce
• Proto Labs' solution: Bridge the gap between great idea and great product
• The winners: Here are three of 2013's winners; Proto Labs has the full story behind these and more Cool Ideas:

3. A wider moat
Proto Labs is growing, and its competitive position is strengthening, making it a compelling long-term investment. As more time passes, it becomes more difficult for competitors to take away Proto Labs' market. Its constant focus on customers, its growing advantage in technology, and its reputation in the industry all lead to a meaningful brand that is not only bringing new customers through the door but is also developing valuable repeat business. Judd summed it up nicely: "We have some really high barriers to entry. Again, the biggest barrier right at the front is proprietary software."

As a result, customers keep coming back to Proto Labs, as shown by the overwhelming share of revenue that comes from existing clients:

The Foolish bottom line
Proto Labs tends to get lumped in with 3-D printers these days, but that's OK; it certainly helps get the name out there. But dig a little deeper, and you'll see a market leader that continues to build out an already impressive competitive advantage in the manufacturing space where 3-D printers can't scratch the right itch. With its impressive market opportunity ahead and even more impressive (and growing) moat, the Proto Labs story is only beginning -- and it should reward any Foolish investor's portfolio for many years to come.

Generally when a drug trial is stopped early it is bad news, lack of effectiveness or a serious safety issue. Once in a rare while, a drug is working so well, that it is unfair to keep it from the placebo group and the trial is halted and unblinded. This is what happened to Bristol-Myers Squibb (NYSE: BMY) phase 3 trial for its PD1 immuno-oncology drug nivolumab. Bristol may have given up first mover advantage to fellow big pharma Merck (NYSE: MRK), but it is still a force to be reckoned with in the burgeoning field.

In this episode of Where The Money Is, Motley Fool health care analysts David Williamson and Michael Douglass discuss the trial stoppage and results, give investors background on immuno-oncology, why this drug is so important to Bristol. Watch and find out about why this tent-pole franchise has megablockbuster written all over it.

The Great Recession began in December 2007, when the U.S. housing market was hit hard by subprime mortgage losses. The fallout led to a decline in consumer spending and business investment, which was followed by massive job losses. In 2008 and 2009, the U.S. workforce lost at least 8.7 million jobs.

According to the National Bureau of Economic Research, the recession officially ended in June 2009. While some sectors of the economy are still struggling, many cities across the U.S. have seen signs of recovery in economic indicators such as the labor market and home values.

With this month marking the five-year anniversary of the official end of the recession, NerdWallet crunched the numbers to find the cities that have improved the most. We considered the following factors in our analysis of 510 of the largest U.S. cities:

1. Labor market: To assess improvement in a city's labor market, we measured the percentage change in unemployment in the civilian labor force from 2009 to 2012. We also calculated the change in median household income.

2. Housing market: We calculated the change in median home value from 2009 to 2012.

Some notable findings include:

• Eight out of the top 10 cities on our list are in Texas, a state that has seen tremendous economic growth in the past few years.
• The largest place among the 50 most improved cities was Washington, D.C.
• Florida had eight cities in the bottom 20 of our list of 510 places -- the most of any state among the "least improved" cities.
• The largest city among the least improved cities was Detroit, which placed 509th out of 510.

For more information on affordability in each of these cities, check out NerdWallet's Cost of Living Calculator. For a full ranking of all 510 cities analyzed for this study and to download the raw data, click here.

1. McAllen, Texas
The median household income from 2009 to 2012 in McAllen increased almost 32%, the second-highest rate of any U.S. city. That growth in income, along with a nearly 16% rise in median home value, is why McAllen tops the list of most improved cities after the recession. The McAllen Chamber of Commerce offers various programs to attract and encourage local business investment and growth.

2. Midland, Texas
Unemployment in Midland's civilian workforce decreased nearly 36%, a steeper drop than in most of the country from 2009 to 2012. The city also saw the nation's highest increase in median home value. The local oil boom has led the economic surge in Midland. According to the Midland Development Corporation, the regional economic index has recorded growth in 50 consecutive months.

3. San Angelo, Texas
San Angelo also experienced a large unemployment decrease, along with impressive growth in income and home values. The major industries in San Angelo include health care, education, trade and transportation, tourism, and business services. Schools, hospitals, and an air force base are among the top employers in the city.

4. Fargo, North Dakota
Fargo's robust economy, which is based on food processing, manufacturing, trade and transportation, education, and health care, has helped fuel recent growth in the labor and housing markets. Major employers in Fargo include Sanford Health and North Dakota State University.

5. Bryan, Texas
Bryan, a city in southeast central Texas, is part of the Bryan-College Station metropolitan area. From 2009 to 2012, unemployment fell while income and home values increased, indicating local economic growth. The top employers in the region are Texas A&M University, Bryan Independent School District, and Sanderson Farms.

6. Chattanooga, Tennessee
Chattanooga, the fourth-largest city in Tennessee, has seen a significant decline in unemployment since the end of the recession. According to the Chattanooga Chamber of Commerce, each year since 2009, gross retail sales in Hamilton County have steadily increased along with median income and median home values -- which shows a healthy rise in consumption.

7. College Station, Texas
The median household income for College Station increased nearly 32%, the highest surge of any city in the nation from 2009 to 2012. College Station has worked with Texas A&M University and its neighbor city of Bryan to develop The Research Valley Partnership, which focuses on innovation and business growth for the local economy.

8. Odessa, Texas
Odessa, Midland's neighbor, from 2009 to 2012 experienced the steepest unemployment drop of all cities analyzed. Median income and home value have also increased since the recession. Residents in Odessa work in the services, mining and construction, retail, government, and information industries.

9. Edinburg, Texas
Edinburg is in southern Texas, near McAllen. Since the end of the recession, the city has seen big improvements in its workforce and the housing market. According to the Edinburg Economic Development Corporation, most local jobs are in education and health services. with the city's school district and regional medical center the top employers.

10. Amarillo, Texas
Unemployment decreased more than 15% from 2009 to 2012 in Amarillo, while the median home value increased about 12%. The city, located in the northern part of the state, is the economic hub of the Texas Panhandle. The Amarillo Economic Development Corporation promotes business expansion and economic growth in the region, which has seen more than a 30% increase in employment over the past 15 years.

Top 40 Most Improved Cities Since the Recession

Methodology
The overall score for each city was calculated by taking the 2009-2012 change in percentage of unemployment in civilian labor force, change in median household income, and change in median home value from the U.S. Census Bureau American Community Survey. The changes in unemployment and median household income were half-weighted.

Blessed with ample landmass, and one of the craggier coastlines found on this planet, Canada boasts the longest coastline of any nation on Earth -- 152,100 miles long, as the drunken crow flies.  That's a devilish amount of water-border to defend. And as global warming continues to melt the Arctic , that coastline is only getting longer.

Canada's Iroquois-class destroyers help to keep the Arctic sea lanes safe -- but with only three of them in the fleet, they're getting a bit stretched. Photo: Wikimedia Commons.

This all makes for quite a dilemma for the Canadian government, and the mere 34.4 million taxpayers who support it. This month, though, Canada committed to spending what it needs to in order to defend its borders, announcing a program to invest up to CAD$50 billion (that's about $48 billion in American money, or $1,395 per man, woman, and tiny Canadian) to build up the strength of its Navy and Coast Guard.

Canada? Oh! Canada!
Down here south of the border, we don't ordinarily think of the Canucks as a particularly militaristic nation. But $48 billion is a sizable chunk of change to spend on defense, even from the perspective of the U.S. defense market. As such, Canada's plan to build 28 warships, and 116 smaller seagoing vessels, over the next 20 years is raising some eyebrows in America.

According to DefenseNews.com, two Canadian shipyards, Irving Shipbuilding of Halifax and the Vancouver Shipyards/Seaspan Marine of Vancouver have been chosen to perform the bulk of the construction work. But sensing chum in the water, foreign defense contractors are swarming Canada for their share of the loot.

French shipbuilder DCNS and Britain's Babcock International have already expressed interest in capturing some of the Canadian work. Franco-German defense conglomerate Airbus and Germany's ThyssenKrupp also number among the interested parties.

They may have to get in line, however. America's General Dynamics is already a close partner of Canadian shipbuilder Irving. Defense contractors L-3 Communications and Lockheed Martin own a piece of a Canadian contract to design new Arctic/Offshore Patrol Ships. Meanwhile, civilian ship specialist Seaspan Corporation has already won a contract to build a Polar-class icebreaker for the Canadian Coast Guard.

Canadian medium icebreaker CCGS Henry Larsen will soon get some help breaking the ice. Photo: Wikimedia Commons.

What it means for investors
Their interest is entirely understandable. This is a really big deal for investors in America's defense contractors. Faced with increasing competition from a growing Russian Navy presence in the Arctic, Canada's plan to build 28 new large warships implies close to a 50% increase in the size of the Canadian fleet, which currently boasts only 15 warships and four submarines (plus an assortment of support ships, minesweepers, and training vessels), over the next 20 years.

Which American companies will win a piece of the action? Which ones should investors be looking at? Certainly, you should start with the four U.S.-based firms named above, all of which already boast significant Canadian business. Historically, Canada's Navy vessels have been mostly homegrown, with Iroquois-class destroyers and Halifax-class frigates, for example, all being built at shipyards in Quebec and New Brunswick. But the fact that the U.S. firms already have contracts in hand will surely give them a leg up on new awards as they are parceled out over the next few years.

If I had to pick just one single stock to focus on, though, I'd say General Dynamics probably will be the most likely winner. The company's history of shipbuilding for the U.S. Navy gives General D the expertise that Canada will be looking for as it builds out its fleet over the coming decades. General Dynamics' "in" with Irving Shipbuilding should help as well. Topping it all off, the company is building a nice reputation as one of Canada's most trusted military suppliers, as evidenced by it recently getting tapped to build thousands of new Canadian light armored vehicles for sale to Saudi Arabia.

GDLS's LAV-25, on patrol. Photo: US Marine Corps

Canada's Ministry of Foreign Affairs, Trade, and Development called that deal "historic," boasting that General Dynamics' work would create "more than 3,000 jobs" for Canadians, "benefiting more than 500 local Canadian firms," and bringing some $13 billion in revenues into the country. If that didn't win General Dynamics some good will in Ottawa, I don't know what will.